- Bitwise CIO says bitcoin wins whether AI booms, busts, or the economy muddles on.
- His case leans on a bailout he calls nearly 100% likely if the AI bubble bursts.
- Hougan admits Covid cut bitcoin 50% in days before a roughly twentyfold rebound.
Matt Hougan, chief investment officer at Bitwise, has told investors that it barely matters which way the economy turns, because Bitcoin ends up higher in almost every scenario. This thesis arrives as Bitcoin’s price fell near $81,100, with a market value of about $1.63 trillion.
Five Scenarios, One Destination
Hougan borrows the format of the old Choose Your Own Adventure books. His routes:
- AI superabundance: Intelligence-based goods get cheap, so value shifts to things that cannot be copied, such as waterfront land, art, gold and bitcoin.
- AI bubble bursts: Risk assets fall at first. Rate cuts, balance-sheet expansion and a bailout follow, and he sees the bailout odds as “nearly 100%” because AI is a national priority.
- Muddling along: With growth near 3% and rates near 4%, ETF flows, adviser adoption and balance-sheet buying keep building.
- Fed hikes into recession: He expects governments to step in, then bitcoin to rally.
- Fed holds, and inflation runs hot: Investors turn to bitcoin as a store of value.
Where the Argument Is Weakest
The bailout assumption carries the most weight. If a downturn does not bring fast money creation, the second route changes. Hougan’s framework also gives no timeline, and the waiting can be costly. He notes Bitcoin fell 50% in days during the early 2020 COVID panic before rising about twentyfold, and says some scenarios bring “a challenging stretch.”
Market history adds warning. During the Fed’s 2022 and 2023 hiking cycle, bitcoin traded well below its highs, falling to around $15,000 after the FTX collapse and recovering only to about $30,000 by the last hike, according to market reports.
A Live Test This Week
US inflation came in at 3.7% against a 3.6% forecast. Markets earlier this week saw an 80% chance of no October rate hike, and the odds are now near 50/50. Bitcoin dropped alongside tech stocks on the news, which fits the short-term pain Hougan expects. Whether it also fits the payoff he promises will take far longer to show.
Hougan says the thesis could fail for reasons unrelated to macro, like quantum computing threatening old wallets, a coordinated government crackdown, or Western governments returning to austerity and sound currencies. He calls these unlikely, though not impossible.
Related: Coinbase Calls for Bitcoin Quantum-Resistant Upgrade Planning
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